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WAC 203 Corporations, Massachusetts trusts.  
SOURCE DOCUMENT DETER. NO DATE OF ISSUE DESCRIPTION
WAC: 458-20-203   05/29/1970 Corporations, Massachusetts trust.Effective 7/1/70
RCW: 82.04.050   2007 "Sale at retail," retail sale."
  82.04.070   1961 "Gross proceeds of sales."
  82.04.080   1961 "Gross income of the business."
  82.04.090   2001 "Value proceeding or accruing."
  82.04.190   2005 "Consumer."
ETA: 3134.2009 2/2/09 Transactions between related entities
  3146.2009 2/2/09 Sale without transfer of possession
  14.04.203 7/1/66 SALE WITHOUT TRANSFER OF POSSESSION Revised 2/2/09 See ETA 3146.2009
  50.04.203 7/8/66 MANAGEMENT CHARGES FROM PARENT TO SUBSIDIARY Cancelled Effective 03/28/08. This document explains that charges to a subsidiary for management fees are taxable.  This subject is more fully addressed in ETA 86.04.201/203.
  86.04.201.203 7/22/66 INCOME FROM A SEPARATE CORPORATION ORGANIZED TO CONDUCT PART OF A PARENT CORPORATION'S BUSINESS Revised 2/2/09 See ETA 3134.2009
  90.04.203 7/22/66 ADMINISTRATIVE AND PERSONNEL CHARGES BETWEEN AFFILIATED CORPORATIONS Cancelled Effective 03/28/08. This document explains that the payment made by an affiliate to a taxpayer for the services of the taxpayer’s employees is subject to service and other activities business and occupation tax.  ETA 86.04.201/203 fully explains the same subject.
  124.08.203 8/5/66 SERVICES OF A CORPORATE OFFICER TO HIS CORPORATION Revised 2/2/09 See ETA 3134.2009
  177.04.203 8/26/66 NONPROFIT SALES BETWEEN PARENT AND SUBSIDIARY CORPORATION Revised 2/2/09 See ETA 3134.2009
  278.04.203 9/30/66 AMOUNTS RECEIVED BY ONE CORPORATION FOR TWO AFFILIATED CORPORATIONS TO COVER THE COSTS OF RESEARCH Revised 2/2/09 See ETA 3134.2009
  279.04.203 9/30/66 CORPORATION HOLDING A CONTRACT FOR THE SALE OF CASTINGS SUPPLIED BY AN AFFILIATE Revised 2/2/09 See ETA 3134.2009
  424.04.203 5/14/71 BUSINESS AND OCCUPATION TAX:  MEANING OF "PERSON" ENGAGING IN TAXABLE BUSINESS Revised 2/2/09 See ETA 3134.2009
INDUSTRY GUIDES:      
SPECIAL NOTICES:      
Tax Avoidance 05/27/2010 Department Authority to Disregard Tax Avoidance Transactions
IAG: 04.01   06/01/2001 Taxability of Investment Income--Repealed effective June 30, 2002.
DIRECTIVE: None      
RPM: None      
WTD: 1 WTD 239 86-266   MISC CORPORATIONS - LEGALENTITY SHAREHOLDERS - STANDING - STAY OF COLLECTION. Only the taxpayer who has been issued an assessment has standing to seek a stay of collection; shareholders are not the same person as the corporation.
  2 WTD 83 86-309   CORPORATIONS -- INTERCOMPANY TRANSACTIONS --CONSOLIDATED FEDERAL RETURNS. The state business and occupation (B&O) tax makes no provision for consolidating returns of affiliated corporations or eliminating intercompany transactions from taxation.
  2 WTD 83 86-309   THIS DETERMINATION HAS BEEN OVERRULED OR MODIFIED IN WHOLE OR PART BY DET.NO. 93-269ER, 14 WTD 153 (1995).
  2 WTD 435 87-99   SALE/USE TAX -- HELICOPTER -- LESSOR'S LIABILITY AT ACQUISITION -- INTERVENING USE -- CLOSELY HELD CORPORATION. Tangible personal property acquired exclusively for rental is not subject to retail sales tax. A tax.A helicopter leased by a sole proprietor to his closely- held corporation was found to be so acquirednotwithstanding a gap in the term of a written lease agreement.
  4 WTD 229 87-342   B&O TAX - WHOLESALE SALES -- AFFILIATED COMPANIES -- SEPARATE "PERSONS." The sale of property by a subsidiary to its parent corporation constitutes a sale within the meaning of the Revenue Act,as each separately organized corporation is a separate taxable '"person."
  4 WTD 267 87-346   B&O TAX -- GROSS INCOME -- EARNINGS OF SUBSIDIARIES AND AFFILIATES -- EQUITY METHOD OF ACCOUNTING -- INCOME RECORDED SOLELY TO PREPARE CONSOLIDATED FINANCIAL STATEMENT.Therecording of the net income of subsidiaries and affiliates as income on the taxpayer's books does not result in taxation when: the taxpayer uses the equity method of accounting; the income is recorded solely for the purpose of preparing consolidated financial statements, and; no income is actually received by the taxpayer.
  4 WTD 267 87-346   B&O TAX -- GROSS INCOME -- SERVICES TO SUBSIDIARIES -- INCREASE IN INVESTMENT IN SUBSIDIARIES ACCOUNT. A taxpayer who provides services to subsidiaries and who, rather than receiving payment for those services, increases the amounts recorded as investments in the subsidiaries is taxable in the amount of the increases. Increases in investment accounts are increases in the assets of the taxpayer and result from services rendered. Thus, they are "other emoluments" received from engaging in business.
  4 WTD 267 87-346   THIS DETERMINATION HAS BEEN OVERRULED OR MODIFIED IN WHOLE OR PART BY DET.NO. 93-269ER,
14 WTD 153 (1995).
  5 WTD 179 88-155   B&O TAX -- AFFILIATES -- CONSOLIDATED RETURNS --CLAIMED JOINT VENTURE -- TRANSFER BETWEEN VENTURERS. When a joint venturer/member transfers a capital asset to a joint venture in exchange for an interest in that joint venture, the transfer will be deemed nontaxable. The law, however, makes no provision for filing of consolidated returns by affiliated corporations or for the elimination of intercompany transactions from the measure of tax.
  5 WTD 319 88-186   B&O TAX -- DEDUCTION -- INTEREST -- LOANS TO AFFILIATES -- FINANCIAL BUSINESS. Interest earned from loans to subsidiaries is not deductible under RCW 82.04.4281 where the loans are a regular and normal part of the taxpayer's business activities; activity which is in competition with a financial business constitutes a financial business.
  6 WTD 123 88-255   SERVICE B&O TAX -- AFFILIATED CORPORATIONS -- MANAGEMENT FEES.Amounts received by one corporation from an affiliated corporation for management fees are subject to the Service B&O tax.
  8 WTD 53 89-331   B&O TAX -- RETAIL SALES TAX -- SEPARATE PERSONS -- COMMONLY-OWNED BUSINESS ENTITIES. The Washington Revenue Act makes no provision for the disregard of transactions between a sole proprietorship and corporation, even though they may share common ownership by a corporation, even though they may share common ownership by a single individual.
  8 WTD 53 89-331   B&O TAX -- RETAIL SALES TAX -- CORPORATE REORGANIZATION -- DISREGARD OF INTERCOMPANY LEASE -- SUBSTANCE OVER FORM. The doctrine of substance over form is not generally available to a taxpayer to eliminate the tax consequences of the taxpayer's chosen form of the transaction.
  8 WTD 69 89-349   CORPORATIONS -- DOING BUSINESS AS TWO SEPARATE CORPORATIONS -- REQUIREMENTS --SEPARATE BOOKS AND RECORDS. Because the taxpayer maintained one set of books and records, filed one federal income tax return, had one federal identification number, and supplied no evidence to substantiate its assertion that it was operating as two separate corporations, the taxpayer was found to be one corporation.
  8 WTD 171 89-437   B&O TAX -- ADVANCE AND REIMBURSEMENTS --ATTORNEY OVERHEAD COSTS. Payments by individually incorporated lawyers to a jointly owned professional service corporation for overhead expenses are not excludable as advances or reimbursements from the business and occupation tax.
  8 WTD 175 89-447   STATE TAXATION -- SEPARATE CORPORATIONS --CHOICE OF ENTITY -- EFFECT OF CHOICE. Each corporation is separately liable for applicable state taxes. Choice of entity by the parent resulting in a "captive" corporation status does not change the result that the 'hospital and the taxpayer are separately-taxable corporations.
  8 WTD 395 89-513   RETAIL SALES TAX -- SEPARATELY INCORPORATED ENTITIES -- AFFILIATES -- EXEMPTION STATUS. Because the taxpayer and its affiliate are separately organized corporations, with separate Federal Identification Numbers, and separate books and records, each must be treated as an independent entity. Therefore in order to be entitled to an exemption, each corporation must satisfy the criteria onits own merits and an exemption applicable to one corporation under Rule 238 is not necessarily applicable to its affiliate.
  9 WTD 139 90-68   PENALTY -- DELINQUENT TAXES -- UNREGISTERED TAXPAYER -- TAX CREDITS OF AFFILIATED CORPORATIONS -- REDUCTION OF PENALTY. Where unregistered taxpayer is assessed penalty for delinquent taxes and its affiliated corporations have tax credits at the same time, the tax credits cannot offset the taxpayer's tax liability so as to reduce the penalty.Each corporation, though in an affiliated group, has separate tax liability. The law makes no provision for filing of consolidated tax returns or consolidated tax liability.
  9 WTD 231 90-108   DEDUCTIONS -- JOINT VENTURES -- CRITERIA --RELATED ENTITIES. Where taxpayer's alleged joint ventures do not meet the criteria to establish that it had joint venture agreements with related entities, deductions taken for payments to those entities will not be recognized as nontaxable.
  11 WTD 395 91-211   MISCELLANEOUS - BUSINESS AND OCCUPATION TAX -INCOME SHIFTING - AGREEMENT. There is no provision in the Revenue Act whereby multiple taxpayers can agree to shift income from one to another. A taxpayer will be taxed on its own "gross income of the business" as earned by its own activities. No income shifting between taxpayers - by agreement or otherwise - will be permitted or recognized for tax purposes.
  11 WTD 413 91-243   RENTS -- RETAIL SALES. The total amount charged to an affiliate for the rental of forklifts is taxable rent. This amount includes charges for repairs, depreciation, and property taxes.
  11 WTD 511 91-319   B&O TAX -- GROSS INCOME. Gross income will not be imputed solely based on adjustments under section 482 of the Internal Revenue Code for federal tax purposes when there is no consideration proceeding or accruing to the taxpayer.
  18 WTD 323 97-174ER   CONTRIBUTIONS TO CAPITAL VERSUS SALES.Where a parent corporation procures the services of third parties for the benefit of a subsidiary and treats the costs of those services as loans to the subsidiary, calculating interest thereon, the parent may not treat the cost of the services as contributions to capital, exempt from taxation under Rule 106.The transactions are sales from the parent to the subsidiary and subject to state excise taxes.
  19 WTD 9 98-194   RETAIL SALES TAX – RETAILING B&O TAX – PASS-THROUGH PAYMENTS – LOANED EMPLOYEES.When a general partner acts as the general contractor on a partnership construction project, the construction laborers under the general partner’s payroll are not considered employees loaned to the partnership, and the payments it receives are not considered advances or reimbursements.
  19 WTD 201 98-214   RETAIL SALES TAX – B&O TAX – SPECULATIVE BUILDER – TITLE – SECURITY.A speculative builder means a person who constructs buildings for sale on land owned by the builder.To determine ownership of the land, record title is only one factor to consider.Legal title to secure financing may be considered a mortgage.Det. No 97-189, 17 WTD 148 (1997) and Det. No. 94-154, 15 WTD 46 (1994).
  19 WTD 262 99-1 36E   B&O TAX – EXEMPTION – CREDIT COUNSELING SERVICES – BANKRUPTCY TRUSTEE.A bankruptcy trustee’s duties include advising and assisting debtors in performing under debt repayment plans.Accordingly, the trustee provides some services similar to the services provided by nonprofit consumer credit counselors.However, a bankruptcy trustee’s duties and activities are far broader than the services provided by such counselors.Because most of the trustee’s duties exceed the scope of the exemption, the trustee is not entitled to claim the exemption from B&O tax.
  19 WTD 456 99-176   RETAIL SALES TAX -- RETAILING B&O TAX – JOINT VENTURE – SPECULATIVE BUILDING.Taxpayers and their co-venturers formed joint ventures because they acquired and contributed land, money, skill, knowledge, and experience to their home-building enterprises while sharing profits and losses without receiving absolute payments for services they respectively rendered.Consequently, retail sales tax and retailing B&O tax were not due on the full contract prices of houses the taxpayers and their co-venturers sold because they were speculative builders.
  19 WTD 723 00-036   MVET – LIABILITY FOR – TRANSFER OF MOTOR HOME BY WASHINGTON RESIDENTS TO OREGON CORPORATION.Washington resident taxpayers were not properly assessed MVET as the registered owners of a motor home registered in Oregon for the period of time after they contributed it to an Oregon corporation, despite the fact that the taxpayers failed to promptly transfer title to the motor home to the corporation.
  19 WTD 723 (Part 1 of 2) 00-036   MVET -- SHAM CORPORATION – PIERCING THE CORPORATE VEIL – DOCTRINE OF DISREGARD.If the form and substance of the corporate entity reveals the entity is a sham, the government may invoke the doctrine of disregard to serve the purpose of the tax statutes.Where Washington resident taxpayers formed an Oregon corporation, their choice of corporate form will be respected unless:1) they intentionally used the corporation to violate or evade a duty and 2) disregard of the corporate entity is necessary to prevent unjustified loss to the injured party.The corporate form will not be disregarded where: 1) the taxpayers maintained separate bank accounts; 2) the corporation kept business records, by-laws, Articles of Incorporation, Statement of Actions and minutes of annual meetings; 3) the corporation filed Oregon state and federal tax returns; 4) the corporation generated revenue;
  19 WTD 723 (Part 2 of 2) 00-036   5) the taxpayers did not attempt to conceal or misrepresent the identity of the responsible ownership, management and financial interest owned by the Corporation; and 6) the corporation did not participate in the diversion of assets to the detriment of creditors.Where the taxpayers, who were corporate officers, used the motor home in Washington only for corporate business, the taxpayers were acting on behalf of the Corporation when they traveled into Washington using a corporate asset.In these circumstances, the taxpayers are not liable for MVET.
  19 WTD 845 99-292R   B&O TAX – INTERCOMPANY TRANSACTIONS –ACCOUNTING RECORDS – IMPEACHMENT OF.Where a professional limited liability company and its corporate members initially account for payments from the PLLC to members as fees for accounting services, the PLLC and members may not amend their records for past periods to retroactively change the payments into non-taxable distributions of profits, absent clear, cogent and convincing evidence that the accounting entries were incorrect.
  20 WTD 514 01-028   JOINT VENTURE – TAX LIABILITY OF EACH PARTY TO JOINT VENTURE.Members of a joint venture engaged in speculative construction are jointly and separately liable for payment of retail sales tax on obligations of the joint venture, and the fact that one member managed the project and ordered materials and subcontract work in that member’s name does not relieve the other members of liability for unpaid sales tax on the materials and subcontracts when the managing member incurred the third-party expenses in the capacity of a partner.
  21 WTD 184 99-029   PARTNERSHIP – ABILITY OF A GENERAL PARTNER TO BIND THE PARTNERSHIP.The action of a general partner who enters into an agreement within the scope of the partnership’s business is the action of the partnership itself, binding the partnership, even if the general partner executes the agreement in his own name.
  22 WTD 72 02-0184   RCW 23B.14.220:CORPORATION -- ADMINISTRATIVE DISSOLUTION -- REINSTATEMENT.A corporation that was administratively dissolved and subsequently reinstated by the secretary of state was a valid corporate entity for all periods after incorporation.The reinstatement related back to the time of dissolution.
  22 WTD 72 02-0184   CORPORATION -- ADMINISTRATIVE DISSOLUTION -- OFFICERS LIABLE AS PARTNERS.Corporate officers were not liable as partners for corporate debt where a valid corporate entity existed at the time the tax liabilities were incurred.
  23 WTD 292 04-0042   USE TAX-- EXEMPTION NOT TRANSFERABLE -- PRIVATE MOTOR VEHICLE.The use tax exemption provided a husband and wife in RCW 82.12.0251 for their privately owned motor vehicle is not transferable to their closely-held corporation when the couple contributed the automobile to their corporation as a capital asset.
  25 WTD 12 05-0020   USE TAX -- CORPORATE DISREGARD – ALTER EGO DOCTRINE – USE TAX.Where a corporate shell with no function beyond holding title to assets that are for the exclusive personal convenience and benefit of its only shareholders, has operated as the mere alter ego of the shareholders, and regarding it as separate from its shareholders would aid in the consummation of a wrong on the State, the Department may look beyond the legal fiction of distinct corporate existence and disregard the corporate entity.
  25 WTD 25 05-0020R   USE TAX -- CORPORATE DISREGARD – ALTER EGO DOCTRINE.Where a corporate entity is a mere shell with no purpose besides avoiding taxation, its only activity is holding title to assets that are for the exclusive personal convenience and benefit of its only shareholders, it has operated as the mere alter ego of the shareholders, and regarding it as separate from its shareholders would aid in the consummation of a wrong on the State, the Department may look beyond the legal fiction of distinct corporate existence and disregard the corporate entity.
  26 WTD 1 05-0104   RETAILING B&O TAX -- RETAIL SALES TAX -- JOINT VENTURER VS. PRIME CONTRACTOR.Where the preponderance of evidence showed that the parties did not intend to form a joint venture, the parties did not have equal control over the construction project, and the parties did not share project profits and losses, a joint venture was not created.
  30 WTD 40 10-0062 11/30/2011 RCW 23B.02.030: FILING ARTICLES OF INCORPORATION PROOF OF CORPORATE EXISTENCE – SEPARATE ENTITY -- ALTER EGO.  The corporate form is to be respected as a separate entity unless there is a showing that the corporate form was used to violate or evade a duty.
OTHER: